board of directors - Sahara One Media And Entertainment Limited

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noteS FoRMInG pARt oF BALAnCe SHeet AS At MARCH 31, 2009 AnD pRoFIt AnD LoSS ACCount FoR tHe YeAR enDeD MARCH 31, 2009 Schedule 21 1. Nature of Operations Sahara one media and entertainment Limited is a television content provider and also produces and distributes movies. 2. Significant Accounting Policies (a) Basis of preparation sahara one media and entertainment limited AnnuAL RepoRt 2008-2009 The financial statements have been prepared to comply in all material respects in respects with the Notified accounting standard by Companies (accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis. the accounting policies have been consistently applied by the Company and are consistent with those used in the previous year. (b) Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. although these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates. (c) Fixed Assets Fixed assets are stated at cost, less accumulated depreciation and impairment losses if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Borrowing costs relating to acquisition of fixed assets which takes substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use. (d) Depreciation Depreciation is provided using the Straight Line method as per the useful lives of the assets estimated by the management, or at the rates prescribed under schedule XiV of the Companies act, 1956 whichever is higher. the useful lives of the assets as estimated by the management are the same as envisaged by Schedule XiV. Useful Life Schedule XIV Rates (SLM) Buildings 61 years 1.63% Plant and machinery 21 Years 4.75% Computers 6 Years 16.21% Shooting equipment 14 Years 7.07% Furniture and Fittings 16 Years 6.33% Vehicles 11 Years 9.5% (e) Impairment i. the carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. an impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. the recoverable amount is the greater of the asset’s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital. ii. after impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life. (f) Leases: Where the Company is the lessee Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognized as an expense in the Profit and Loss account on a straight-line basis over the lease term. Where the Company is the lessor Assets given under a finance lease are recognised as a receivable at an amount equal to the net investment in the lease. Lease rentals are apportioned between principal and interest on the iRR method. the principal N O T E S F O R M I N G PA R T O F B A L A N C E S H E E T A N D P R O F I T A N D L O S S A C C O U N T 37
sahara one media and entertainment limited AnnuAL RepoRt 2008-2009 noteS FoRMInG pARt oF BALAnCe SHeet AS At MARCH 31, 2009 AnD pRoFIt AnD LoSS ACCount FoR tHe YeAR enDeD MARCH 31, 2009 Schedule 21 (contd.) amount received reduces the net investment in the lease and interest is recognised as revenue. initial direct costs such as legal costs, brokerage costs, etc. are recognised immediately in the Profit and Loss Account. Assets subject to operating leases are included in fixed assets. Lease income is recognised in the Profit and Loss account on a straight-line basis over the lease term. Costs, including depreciation are recognised as an expense in the Profit and Loss Account. Initial direct costs such as legal costs, brokerage costs, etc. are recognised immediately in the Profit and Loss Account. (g) Investments Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. however, provision for diminution in value is made to recognise a decline, other than temporary, in the value of the investments. (h) Inventories Inventories comprise television programs and films held for sale. Inventories are valued at lower of cost or net realisable value. Management allocates the cost of 90% of the television program and films with perpetual rights to domestic market and 10% to the other markets. (i) Revenue Recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. i. Sale of Goods Revenue is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer i.e. when the television program & film are delivered to the customers. ii. Interest Revenue is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable. iii. Dividends Revenue is recognized when the shareholders’ right to receive payment is established by the balance sheet date. (j) Foreign Currency Transactions i. Initial Recognition Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. ii. Conversion Foreign currency monetary items are reported using the closing rate. non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. iii. Exchange Differences exchange differences arising on the settlement of monetary items or on reporting such monetary items of the company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise. (k) Retirement benefits i. Retirement benefits in the form of Provident Fund are a defined contribution scheme and the contributions are charged to the Profit and Loss Account of the year when the contributions to the respective funds are due. there are no other obligations other than the contribution payable to the respective trusts. ii. Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation projected unit credit (PUC) method made at the end of each financial year. iii. Long term compensated absences are provided for based on actuarial valuation. the actuarial valuation is done as per projected unit credit method. iv. Actuarial gains / losses are immediately taken to profit and loss account and are not deferred. 38 N O T E S F O R M I N G PA R T O F B A L A N C E S H E E T A N D P R O F I T A N D L O S S A C C O U N T
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